At a press conference on the regular cabinet meeting on July 30, Minister and Chairman of the Government Office Vu Duc Dam said: "Socio-economic development has been on the right track and getting better since the beginning of this year. However, progress is not as fast as expected. In the language of economics, this is called "economic growth below potential."
Slow but steady economic growth
The economy has been on the right track. The consumer price index (CPI) rose 0.27 percent in July against the previous month and climbed 2.68 percent in the year to date.
Minister Vu Duc Dam said the objective of curbing inflation at some 7 percent this year, set by the lawmaking National Assembly, is within reach. In addition, the business situation got better, with industrial growth indicators growing month on month and quarter on quarter. Despite existing difficulties, the number of new business start-ups increased while the number of bankruptcies declined. Inventories returned to normal levels. The overall economic restructuring and growth paradigm change scheme has been actively implemented. Public investment restructuring, State-owned enterprise restructuring, credit institution restructuring, and bad debt handling achieved initial results.
According to the report submitted by the Ministry of Planning and Investment, positive right-tracked socioeconomic development in the first seven months of 2013 has laid a stronger groundwork for the successful implementation of objectives in 2013. Macro economy was stable and inflation was controlled. CPI in July 2013 rose 0.27 percent and 2.68 percent compared with December 2012, the lowest January-July growth from 2004 to 2011 (the growth in the corresponding period in 2012 was 2.22 percent).
Exports maintained high growth momentum. The country’s export turnover reached US$72.74 billion in the first seven months of 2013, up 14.3 percent year on year, while total imports valued US$73.47 billion, up 15 percent. Trade deficit was US$733 million in the January - July period, equivalent to one percent of total exports. Positive exports and imports are a positive signal to recovering domestic production.
The country also saw good results in foreign direct investment (FDI) and official development assistance (ODA) disbursement. FDI disbursement valued US$6.65 billion in the first seven months, up 6.4 percent year on year and new registered FDI capital reached US$11.91 billion, up 19.6 percent. ODA disbursement was US$2.55 billion in the seven-month period, equal to 59.3 percent of the full-year plan.
Inventories tended to decline. Inventory index of processing and manufacturing industries as of July 1, 2013 rose 8.8 percent from a year earlier and dropped from 9.7 percent as at June 1, 2013 and 21.5 percent as at January 1, 2013.
Other aspects like social security, national defence and security were guaranteed.
Better safe than sorry
Minister Dam said that demand boost is essential to improve purchasing power and demand. However, without a proper approach, demand boost may cause inflation. Recently, the Government asked domestic and international economists to delve into socioeconomic situation and propose solutions. Generally suggested, Vietnam has longer-term administration targets like fiscal and monetary policies, contain inflation at 7 percent, and push up the growth rate.
He stressed: "It is not the most important thing to bring inflation down to a low level immediately or push up growth to a high level immediately, but to maintain macroeconomic stability, promote economic restructuring and create momentum for future development.”
At this monthly cabinet meeting, the Government discussed and underlined restructuring acceleration, especially banking system restructuring. In the first seven months, credit growth kept positive changes, estimated to rise 5.02 percent as of July 25, 2013 (compared with 1.2 percent growth in the same period in 2012). Interest rates were brought down to keep pace with inflation. Lending interest rates for priority sectors stood at 7-9 percent per annum. Rising credit growth, lower interest rates and tax break measures have helped businesses to deal with difficulties.
However, the economy is still struggling with existing limitations and problems. Many sectors are developing slowly and unstably, especially agriculture and industry. Goods consumption, especially consumption of agricultural products like rice and seafood, continues to face numerous difficulties on falling prices, weakening purchasing power, and trade remedies in many major markets.
Amid slow global economic recovery, complicated development, and unpredictable hidden risks, in the last months of the year, the Government will continue to hold fast to objectives, criteria and solutions adopted at the start of the year. The Government will stick to stabilising macro economy, taming inflation, and directing solutions to support enterprises to deal with difficulties in production and business in accordance with Resolution 01, Resolution 02, other resolutions of cabinet monthly meetings, and directives of the Prime Minister to obtain reasonable growth, raise quality, productivity and efficiency of production to provide a foundation for macroeconomic stability, social security and sustainable growth in the future.
Huong Ly
Vietnamese
